Continuing Lenovo's period of strong, sustainable growth

Last quarter I said that Lenovo had entered a phase of “acceleration” in both our business performance and our transformation strategy execution. Today I am pleased to say that our acceleration continues and we now have even stronger momentum.

Our group revenue continued double-digit growth year-on-year for the third consecutive quarter, reaching $13.4 billion, the highest in almost 4 years. Our pre-tax income reached $213 million, 6 times as much as the previous year, as all of our businesses improved profitability.

Our Intelligent Devices Group continues to deliver strong results thanks to the synergy from the shared platforms and resources. We will continue to drive the convergence of computing and communication technologies to enable Smart IoT.

In PC, we returned to undisputed #1 by both IDC and Gartner, with a record market share of 24%. Our PC revenue grew more than 20% year-on-year, 17 points faster than the market. Our PC + Tablet, or PCD revenue reached $10 billion milestone for the first time. We achieved all these while further extending industry leading profitability to more than 5%.

We will continue to focus on customers and invest in high-growth segments including workstations, gaming, and thin & light. We are confident that this business will continue to thrive at a premium to the market in volume, revenue and profit.

Our Mobile business reached an important milestone last quarter, as operational PTI of the Motorola brand became profitable at $2 million, reaching breakeven.

This past quarter we continued to execute our focused strategy. We reduced operating expenses by $175 million year-on-year, on track to control the full year expense to less than $1 billion. Our investment in products and innovation showed clear results. Our Moto G and Moto E product lines gained market traction, and we are the first to launch a 5G upgradable phone in the industry. Our focus on selected markets continued to deliver strong progress. In North America, shipments grew more than 50% year-on-year for the 5th consecutive quarter, and market share reached almost 8%, ranking #4 by IDC. In Latin America, we continued topline growth and became Number 1 in Mexico, while maintaining solid overall number 2 regionally. In China, revenue grew almost 85% year-on-year.

We will continue to execute this strategy to further improve the health of our smartphone business.

Our Data Center business is on track to become a sustainable growth and profit engine. Revenue continued strong double-digit growth at almost 60%, and profitability improved almost 10 points, year-on-year. This performance was driven by yet another quarter of triple-digit year-on-year revenue growth in Software Define Infrastructure and Hyperscale. We are now the worldwide #4 in Cloud infrastructure vendors, and fastest growing player among top vendors according to IDC.

We will continue to invest in technology leadership and strengthen our capabilities in software defined, storage and networking. Our multi-billion dollar partnership with NetApp announced in September significantly expanded our storage and data management market coverage. In addition, we will continue to refine our hyperscale business model; strengthen our leadership in High Performance Computing and A.I.; and drive service revenue growth.

In our annual flagship events Tech World and Transform last quarter, we clarified Lenovo’s mission to become the leader and enabler of intelligent transformation, and showcased how we will drive this transformation through Smart IoT, Smart Infrastructure and Smart Vertical solutions.

We displayed our Lenovo “Smart Essentials” smart home products at the events including the Smart Plug, Smart Bulb, Smart Camera, and Smart Door Lock, after the successful launch of Smart Display and the Mirage series last quarter. Also, Device-as- a-Service continued its rapid growth, with booking revenue up 1.5 times quarter-to-quarter. In addition, overall Services and Software revenue reached $688 million. Big data and A.I. powered smart vertical solution revenue was also up 44% year-on-year.

Strong execution is one of Lenovo’s key capabilities; with the clear mission and transformation strategy, it is now reflected by the strong momentum we have today. I am confident that we are in a period of robust, sustainable growth, and we will continue to drive even stronger results. 

*Read our earnings press release here.